GST glossary
Bill of supply
A bill of supply is the document a GST-registered business issues instead of a tax invoice when no GST is charged, that is, for exempt goods or services or when the seller is under the composition scheme. It shows the sale but no tax, and the buyer cannot claim input tax credit on it.
Why it matters to your business
If you charge tax on a document you were not allowed to charge it on, you must pay that tax to the government even though the supply was exempt. If you issue a tax invoice as a composition dealer, you break a condition of the scheme. Using the right document keeps your returns clean and your customer clear about whether any credit is available.
How it works
As of October 2026:
- Rule 49 of the CGST Rules lists what a bill of supply must show: your name, address and GSTIN, a unique number of up to 16 characters, the date, the buyer’s details, the HSN or SAC code, the description and the value, and your signature.
- It shows no tax rate and no tax amount.
- A composition dealer must print “composition taxable person, not eligible to collect tax on supplies” at the top.
- Bills of supply are reported in GSTR-1 under nil-rated, exempt and non-GST supplies.
- Exports and supplies to SEZ units are not exempt supplies. They are zero-rated and go on a tax invoice.
An example
A trader in Lucknow sells fresh vegetables worth ₹4,000 to a restaurant. Fresh vegetables are exempt, so the trader issues a bill of supply for ₹4,000 with no GST. The same trader selling packed and labelled goods that carry 5% GST issues a tax invoice for those.
Common mistakes
- Showing GST on a bill of supply.
- Using the tax invoice number series for bills of supply.
- Treating an export as exempt and issuing a bill of supply for it.
- Forgetting to report exempt sales in GSTR-1 because no tax was due.
Questions about Bill of supply
What is the difference between a tax invoice and a bill of supply?
A tax invoice charges GST and lets the buyer claim input tax credit. A bill of supply charges no GST, because the goods are exempt or the seller is a composition dealer, and gives the buyer no credit.
Who must issue a bill of supply?
A registered business selling exempt goods or services, and every business registered under the composition scheme, for all its sales.
Can one document cover taxable and exempt items?
Yes, when you sell both to an unregistered customer. A single invoice-cum-bill of supply can list the taxable items with GST and the exempt items without.
Is a bill of supply needed for small sales?
Not for a sale under ₹200 to an unregistered customer who does not ask for one. You then make one consolidated bill of supply for such sales at the end of the day.
Updated .